Opinion
Index No. 63586/2022 Seq. Nos. l 2 3
04-13-2023
JAMES FRANZESE AND KRISTIN FRANZESE, Plaintiffs, v. STREETS AND AVENUES DEVELOPMENT CORPORATION, NIK STANOVIC, PAUL DENNIS ARCHITECTS, PAUL DENNIS DBA PAUL DENNIS ARCHITECTS, AND PAUL DENNIS, INDIVIDUALLY, Defendants.
Unpublished Opinion
Motion Date: 02/14/2023
AMENDED DECISION AND ORDER
DAMARIS E. TORRENT, A.J.S.C.
The following papers were read on Motion Seq. Nos. 1, 2 and 3. Defendants Paul Dennis d/b/a Paul Dennis Architects and Paul Dennis (hereinafter collectively the Dennis defendants) move (Seq. #1) for an order pursuant to CPLR 3211(a), dismissing plaintiffs' complaint against the Dennis defendants. Defendants Streets and Avenues Development Corporation and Nik Stanovic (hereinafter collectively the S&A defendants) move (Seq. #2) for an order pursuant to C PLR 3211 (a)(7) and 3013 dismissing the third, sixth, ninth and tenth causes of action in plaintiffs' amended complaint as they related to Streets and Avenues Development Corporation, and dismissing the amended complaint in its entirety as it relates to Nik Stanovic on the ground that the amended complaint fails to state a cause of action. Plaintiffs move (Seq. #3) pursuant to CPLR 3025(b) for an order permitting plaintiffs to amend their amended complaint, directing service of such amended complaint, and for such other and further relief as this Court deems just and proper.
All counsel are reminded to comply with the word count limitation and certification requirement in accordance with 22 NYCRR 202.8-b. Submitting a word count certification for a different document is not permitted (NYSCEF doc #39).
Notice of Motion (Seq. #1)/Dennis Affirmation in Support / Memorandum of Law in Support / Exhibit ____ 1-4
Affidavits of Service ____ 5-6
Stipulations Adjourning Motion ____ 7-8
Affirmation in Opposition I Memorandum of Law in Opposition I Exhibits ____ 9-15
Memorandum of Law in Reply 16
Notice of Motion (Seq. #2) / Stanovic Affidavit in Support / Exhibits Memorandum of Law in Support ____ 17-21
Stipulations Adjourning Motion ____ 22-24
Affirmation in Opposition / Franzese Affidavit in Opposition / Memorandum of Law in Opposition / Exhibits ____ 25-32
Affirmation in Partial Support ____ 33
Stanovic Affidavit in Further Support I Exhibits / Memorandum of Law in Reply ____ 34-37
Notice of Motion (Seq. #3) / McMillan Affirmation in Support / Exhibits ____ 38-41
Affirmation in Opposition ____ 42
Plaintiffs allege that they entered into a contract with Paul Dennis d/b/a Paul Dennis Architects on August 3, 2021 for purposes of providing architectural drawing, planning and blueprint services for the renovation and extension of their home. Plaintiffs allegedly entered into a contract on November 23, 2021 with defendant Nik Stanovic of Streets and Avenues Development Corporation, a general contractor, for the renovation and extension of the home. It is alleged that defendants breached the terms of the contract (NYSCEF doc #18, amended complaint). The Dennis defendants filed a pre-answer motion to dismiss the complaint. Plaintiffs filed an amended complaint as of right pursuant to CPLR 3025(a). The Dennis defendants elect to address their motion to dismiss to plaintiffs' amended complaint (Dennis defendants' Reply Memorandum of Law, p. 4). The S&A defendants' motion to dismiss addresses the amended complaint.
In considering a motion to dismiss for failure to state a cause of action, the pleading must be liberally construed. The Court must accept the facts as alleged in the complaint as true, accord the plaintiff the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. The standard is whether the pleading states a cause of action (Houtenbos v Fordune Assn., Inc., 200 A.D.3d 662 [2d Dept 2021]). The court may consider affidavits submitted by the plaintiff to remedy any defect in the complaint and the facts alleged therein must be assumed to be true (Barry's Auto Body of NY, LLC v Allstate Fire & Cas. Ins. Co., 190 A.D.3d 807 [2d Dept 2021]). However, bare legal conclusions are not presumed to be true and are not accorded every favorable inference (Breytman v Olinville Realty, LLC, 54 A.D.3d 703 [2d Dept 2008]). When the moving party submits evidentiary material in support of the motion, the criterion becomes whether the proponent of the pleading has a cause of action, not whether he has stated one (Sokol v Leader, 74 A.D.3d 1180 [2d Dept 2010]). Whether a plaintiff can ultimately establish the allegations is not part of the calculus (Dee v Rakower, 112 A.D.3d 204 [2d Dept 2013]).
Second Cause of Action for Breach of Contract
The first cause of action sounds in breach of contract as against the S&A defendants (NYSCEF doc #18, p. 18). The S&A defendants do not seek relief as to the breach of contract claim against Streets and Avenues Development Corporation.
Plaintiffs' second cause of action sounds in breach of contract as against the Dennis defendants (NYSCEF doc #18, p. 20). Plaintiffs allege in part that the Dennis defendants breached their obligations under the August 3, 2021 contract by providing architectural services that were not in compliance with codes, providing plans that failed inspection several times, failing to compensate plaintiffs for delays, and wrongfully terminating the contract (NYSCEF doc #18, p. 21). The elements of a cause of action for breach of contract are the existence of a contract, plaintiffs performance pursuant to the contract, defendant's failure to perform, and resulting damages (Kausal v Educational Prods. Info. Exch. Inst., 105 A.D.3d 909 [2d Dept 2013]; Nandlal v Al-Pros Constr., Inc., 55 Misc.3d 1217[A], 2017 NY Slip Op 50620[U] [Sup Ct, Queens County 2017]). Where a homeowner alleges a contractor breached its undertaking to perform a renovation in a good and workmanlike manner, a cause of action for breach of contract may be properly asserted (West Park Assoc., Inc. v Cohen, 43 A.D.3d 818 [2d Dept 2007]; Jeffries v Willow Woodworking, Inc., 40 Misc.3d 1205[A], 2013 NY Slip Op 50148[U] [Sup Ct, Westchester County 2013]). The complaint alleges facts sufficient to state a cause of action for breach of contract. Insofar as plaintiffs assert that they are entitled to recover damages for mental suffering occasioned by breach of contract, plaintiffs do not cite to any controlling caselaw in support of this argument (see Plaintiffs' Memorandum of Law in Opposition to S&A Defendants' Motion, p. 15).
Third and Fourth Causes of Action for Negligence
Plaintiffs' third cause of action sounds in negligence as against the S&A defendants (NYSCEF doc #18, p. 22). Plaintiffs allege that the S&A defendants were negligent and reckless in the manner in which they performed work, labor and services for the renovation and extension of plaintiffs' premises, as provided for in the November 23, 2021 contract. Plaintiffs allege that the construction services provided were inferior. It is alleged that the S&A defendants failed to timely complete the construction in compliance with the contract, failed to compensate plaintiffs for delays, and wrongfully terminated the contract (NYSCEF doc #18, p. 23).
Plaintiffs' fourth cause of action sounds in negligence as against the Dennis defendants (NYSCEF doc #18, p. 26). Plaintiffs allege that the Dennis defendants were negligent and reckless in the planning, drafting and/or drawing of architectural plans, drawings and blueprints for the renovation and extension of plaintiffs' premises, as provided for in the August 3, 2021 contract. It is alleged that they failed to provide the same free from errors and omissions, and in conformity with the applicable rules and regulations. It is alleged that the Dennis defendants provided architectural services which were inferior and below the standard common to the industry, failed to timely complete the construction in conformity with the contract, failed to compensate plaintiffs for delays, and wrongfully terminated the contract (NYSCEF doc #18, p. 27-28).
Plaintiffs do not plead a cognizable cause of action sounding in negligence as against the Dennis defendants. "[A] simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated .... This legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract, although it may be connected with and dependent upon the contract" (Kollatz v KOS Bldg. Group, LLC, 188 A.D.3d 1175, 1178 [2d Dept 2020], quoting 431 Conklin Corp, v Rice, 181 A.D.2d 716, 717 [2d Dept 1992]). Where the alleged negligent acts are nothing more than allegations of implied obligations under the contract, merely asserting allegations using tort law language does not transform a simple breach of contract claim into a tort claim (431 Conklin Corp., 181 A.D.2d at 716, 717; see also Millet v Kamen, 60 Misc.3d 584 [Sup Ct, Nassau County 2018]). As to the Dennis defendants, plaintiffs do not allege facts that would give rise to a duty independent of the duty imposed by the parties' agreements (see Michael Davis Constr., Inc. v 129 Parsonage Lane, LLC, 194 A.D.3d 805 [2d Dept 2021]).
However, under certain circumstances, professionals may be subject to tort liability for failure to exercise reasonable care, irrespective of their contractual duties (id. at 805; Sommer v Federal Signal Corp., 79 N.Y.2d 540 [1992]). In determining whether claims alleging breach of contract and tort may exist side by side, the Court may consider the nature of the injury, the manner in which the injury occurred, and the resulting harm (Board of Mgrs. of Beacon Tower Condominium v 85 Adams St., LLC, 136 A.D.3d 680 [2d Dept 2016]; Sommer, 79 N.Y.2d at 540). James Franzese submits an affidavit in opposition to S&A's motion stating that on May 1,2021 a fire broke out in his house as a result of the S&A defendants' negligence. It is alleged that in the course of remodeling the kitchen, the S&A defendants removed the roof, left wires hanging down and failed to turn the electricity off. In an inspection, a fire chief reportedly attributed the fire to exposed wires hanging down, the electricity being left on, and debris left in the home (Franzese Affidavit in Opposition, p. 8). The subject contract with the S&A defendants states the contractor will subcontract electrical work to a licensed electrical contractor (Stanovic Affidavit in Support, Exhibit B) Plaintiffs have plead a cognizable cause of action for negligence as to the allegation that the S&A defendants negligently caused a fire in the house, resulting in property damage (NYSCEF doc #18, p. 24, 25). The additional allegations of negligence asserted against the S&A defendants are dismissed as duplicative of the breach of contract claim.
In an affidavit in further support, Nik Stanovic asserts that the fire on the premises was not caused by S&A defendants. He asserts it was caused by a malfunction of the old electrical wiring system and plaintiffs contracted with their own electrician who caused or failed to correct the issue (Stanovic Affidavit in Further Support, p. 2).
Fifth Cause of Action for Architectural Malpractice
Plaintiffs' fifth cause of action sounds in architectural malpractice as against the Dennis defendants. Plaintiffs allege the Dennis defendants deviated from accepted architectural standards in the planning, drafting and drawing of architectural plans for the renovation and extension of the premises (NYSCEF doc # 18, p. 32, 33). It is alleged the architectural drawings and plans contained errors and omissions, the home was not in compliance with building codes, and the home was structurally unsafe and uninhabitable (NYSCEF doc #18, p. 35). It is alleged that defendant Paul Dennis would oversee and supervise the project (NYSCEF doc #18, p. 12). Under certain circumstances, a professional architect may be subject to a tort claim for failure to exercise due care in the performance of contractual obligations (Michael Davis Constr,, 194 A.D.3d at 805). However, where, as here, plaintiffs are essentially seeking enforcement of contract rights and do not allege distinct damages, the architectural malpractice cause of action should be dismissed as duplicative of the breach of contract cause of action (see Anderson v Pinn, 185 A.D.3d 534 [2d Dept 2020], citing Dormitory Auth. Of the State of N.Y. v Samson Constr. Co., 30 N.Y.3d 704 [2018]). Sixth and Seventh Causes of Action for Breach of the Covenant of Good Faith and Fair Dealing
Plaintiffs' sixth and seventh causes of action sound in breach of the covenant of good faith and fair dealing as against all defendants. Plaintiffs allege that the respective contracts contained express and implied covenants of good faith and fair dealing and defendants breached these covenants. It is alleged the defendants provided inferior services, failed to cooperate with the owners in performing the work, failed to complete the construction in compliance with the contracts, and wrongfully terminated the contract (NYSCEF doc #18, p. 38-39, 40).
A cause of action for breach of the implied covenant of good faith and fair dealing is premised upon parties to a contract exercising good faith in performing the terms of the contract. "The implied covenant of good faith and fair dealing is a pledge that neither party to the contract shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruit of the contract, even if the terms of the contract do not explicitly prohibit such conduct" (PS. Fin., LLC v Eureka Woodworks, Inc., - Misc.3d -, 2023 NY Slip Op 00877 [2d Dept 2016]). A cause of action for breach of an implied covenant of good faith and fair dealing must allege facts which tend to show defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff (Aventine Inv. Mgt., Inc. v Canadian Imperial Bank of Commerce, 265 A.D.2d 513 [2d Dept 1999]). Here, the conduct complained of and the alleged damages are identical to those alleged in the breach of contract claim. As pleaded, the breach of the covenant of good faith and fair dealing cause of action is duplicative of the breach of contract cause of action (see Cortazar v Tomasino, 150 A.D.3d 668 [2d Dept 2017]).
Eighth and Ninth Causes of Action for Fraudulent Inducement and Negligent Misrepresentation
Plaintiffs' eighth and ninth causes of action sound in fraudulent inducement and negligent misrepresentation as against all defendants. As to the Dennis defendants, plaintiffs allege that they made express and implied warranties to the plaintiffs as to the design and their skill, ability and experience in performing such architectural work. As to the S&A defendants, it is alleged that they made express and implied warranties to the plaintiffs regarding their construction skills, abilities and experience in performing such construction in accordance with the architectural plans and drawings. It is alleged that all defendants knowingly made false representations of an existing material fact for the purpose of inducing the plaintiffs to retain their services. It is alleged that plaintiffs reasonably relied on the misrepresentations and sustained damages as a result of the misrepresentations (NYSCEF doc #18, p. 41-42, 43-44). In James Franzese's affidavit, he alleges that during plaintiffs' first meeting and conversations with Mr. Stanovic, he held himself out to be a highly accomplished contractor, capable of performing the job and having the ability to read and follow blue prints and plans. It is alleged that he represented that he was familiar with applicable building codes and regulations. Mr. Franzese states he later learned that these representations were false (Franzese Affidavit, p. 6).
"The elements of a cause of action sounding in fraud are a material misrepresentation of an existing fact, made with knowledge of the falsity, an intent to induce reliance thereon, justifiable reliance upon the misrepresentation, and damages" (Orchid Constr. Corp, v Gottbetter, 89 A.D.3d 708, 709 [2d Dept 2011] [citations omitted]). A negligent misrepresentation cause of action requires the existence of a special or privity-like relationship imposing a duty to impart correct information, that the information was incorrect, and reasonable reliance on the information (Michael Davis Constr., 194 A.D.3d at 805). CPLR 3016(b) provides that when a cause of action is based upon misrepresentation or fraud "the circumstances constituting the wrong shall be stated in detail."
General allegations that a party entered into a contract while lacking the intent or ability to perform under the contract are insufficient to support a claim of fraudulent inducement (see Michael Davis Constr., 194 A.D.3d at 805; Fromowitz v W. Park Assoc., Inc., 106 A.D.3d 950 [2d Dept 2013]). Furthermore, a cause of action alleging fraudulent inducement or negligent misrepresentation does not lie where it is based on the same allegations as the breach of contract claim (Michael Davis Constr., 194 A.D.3d at 805; Board of Mgrs. Of Beacon Tower Condominium, 136 A.D.3d at 680). These causes of action are duplicative of a breach of contract cause of action if they are based on identical circumstances as the cause of action for breach of contract, and they do not allege that plaintiffs sustained damages independent of the damages allegedly incurred for breach of contract (Town of N. Hempstead v Corona Realty Holding, LLC, 212 A.D.3d 863 [2d Dept 2023]; Chen v Wen Fang Wang, 177 A.D.3d 694 [2d Dept 2019]). As such, the eighth and ninth causes of action must be dismissed as duplicative of the breach of contract claims.
Tenth and Eleventh Causes of Action for Breach of Warranty
Plaintiffs' tenth and eleventh causes of action sound in breach of express and implied warranty as against all defendants (NYSCEF doc #18, p. 45, 46). Plaintiffs allege that the Dennis defendants "breached the express warranty of handling the architectural design job in conformity with the standards in the industry," and expressly warranted their knowledge of architectural work for this type of project. As to the S&A defendants, plaintiffs allege they breached certain paragraphs in the November 23, 2021 agreement. It is alleged that the S&A defendants breached an implied warranty of habitability and an implied warranty of skillful construction. A claim of breach of implied warranty of habitability only applies to a residential lease space (Real Property Law § 235-b; Disunno v WRH Props., LLC, 97 A.D.3d 780 [2d Dept 2012]). Furthermore, where the subject contract is primarily one for services, defendant may not be subjected to liability on a separate theory that it violated an express or implied warranty (Town of Poughkeepsie v Espie, 41 A.D.3d 701 [2d Dept 2007]; Resnick v Lebovitz, 28 A.D.3d 533 [2d Dept 2006]; cf Michael Davis Constr., 194 A.D.3d at 805 [denying motion to dismiss where breach of warranty claim was based on an agreement that was independent of the parties' original agreement]).
Motion on behalf of Nik Stanovic
The S&A defendants seek dismissal of the amended complaint in its entirety as against Nik Stanovic. Plaintiffs allege that Mr. Stanovic was the owner and agent of Streets and Avenues Development Corporation, who was acting in a supervisory capacity. It is alleged that on November 23, 2021, plaintiffs negotiated a contract with Mr. Stanovic of Streets and Avenues Development Corporation for construction and renovation of their home (NYSCEF doc #18, p. 5, 7). Mr. Stanovic submits an affidavit stating he did not sign the contract in an individual capacity and the contract does not include a personal guaranty. In opposition, Mr. Franzese submits an affidavit stating that while Mr. Stanovic claims to have signed the contract on behalf of the company, he is the sole shareholder of the corporation. Mr. Franzese states that Mr. Stanovic made numerous personal guarantees and material misrepresentations and he should be held personally liable (Franzese Affidavit in Opposition, p. 7).
Plaintiffs fail to state a cause of action for breach of contract against Mr. Stanovic, as it is alleged that he signed the contract on behalf of a disclosed principal without alleging that he intended to be personally bound by the agreement (see Environmental Appraisers &Bldrs., LLC v Imhof, 143 A.D.3d 756 [2d Dept 2016]). Contrary to plaintiffs' contentions, plaintiffs fail to allege the necessary elements to pierce the veil of the corporation and hold Mr. Stanovic personally liable for breach of contract. A party seeking to pierce the corporate veil must establish "that the owners through their domination, abused the privilege of doing business in the corporate form'' (East Hampton Union Free School Dist. v Sandpebble Bldrs., Inc., 66 A.D.3d 122, 126 [2d Dept 2009] [citations omitted] [dismissing complaint against the individual defendant as it failed to allege facts needed to pierce the corporate veil]; see also Puma Sidewalk Corp, v GDYProps., Inc., 2011 NY Slip Op 30771[U][Sup Ct, Nassau County 201 l][noting allegations that an individual dominated a corporation and exercised bad faith in negotiating a contract are insufficient to pierce the corporate veil]; Jeffries, 2013 NY Slip Op 51048[U] [noting that the defendants offering the plaintiffs certain assurances about the work does not create personal liability]). In determining whether the owner has abused the privilege of doing business in the corporate form, the factors to be considered include whether there was a "failure to adhere to corporate formalities, inadequate capitalization, commingling of assets, and use of corporate funds for personal use" (East Hampton Union Free School Dist., 66 A.D.3d at 122, 127 [citation omitted]). Here, plaintiffs do not allege facts and circumstances indicating the Mr. Stanovic abused the privilege of doing business in the corporate form.
Corporate officers may not be held personally liable based on the contracts of their corporations, provided they did not purport to bind themselves individually. However, corporate officers may be held personally liable for tortious conduct committed in the performance of their corporate duties (Lido Beach Towers v Denis A. Miller Ins, Agency, Inc., 128 A.D.3d 1025 [2d Dept 2015]; Kopec v Hempstead Gardens, 264 A.D.2d 714 [2d Dept 1999]). Plaintiffs plead a cognizable cause of action for negligence against Mr. Stanovic limited to the allegation that the S&A defendants negligently caused a fire in the house (NYSCEF doc #18, p. 22).
Plaintiffs' Motion for Leave to Amend
Plaintiffs move (Seq. #3) for an order permitting them to amend their amended complaint. A party may amend or supplement his pleading by setting forth additional or subsequent transactions or occurrences at any time by leave of court or by stipulation of all parties. Leave shall be freely given upon such terms as may be just. Any motion to amend or supplement a pleading shall be accompanied by the proposed amended or supplemental pleading clearly showing the changes or additions to be made to the pleading (CPLR 3025[b]). If a pleading has once been amended without leave of court, leave must be obtained for a further amendment "Leave to amend a pleading shall be freely given absent prejudice or surprise to the opposing party, unless the proposed amendment is palpably insufficient or patently devoid of merit" (Ciminello v Sullivan, 120 A.D.3d 1176, 1177 [2d Dept 2014]). In support of the motion for leave to further amend the complaint, plaintiffs assert that the facts alleged support a claim for breach of contract, negligence, fraud, and breach of warranty.
The Court is constrained to deny plaintiffs' motion, as plaintiffs fail to submit a proposed second amended complaint on the motion in contravention of the statutory requirement. CPLR 3025[b] has required since January 1, 2012 that the proposed amended pleading accompany the moving papers, and show the changes or additions to be made to the pleading (Lennon v 56th &Park (NY) Owner, LLC, 199 A.D.3d 64 [2d Dept 2021]). Furthermore, insofar as plaintiffs seek to further amend the complaint to comport with factual allegations contained in plaintiff James Franzese's affidavit, the affidavit was submitted and considered by this Court in opposition to the S&A defendants' motion to dismiss (McMillan Affirmation in Support, Exhibit A). As plaintiffs fail to raise any new facts, transactions, occurrences orallegations, not alleged in the first amended complaint or considered on defendants' motions to dismiss, plaintiffs' motion for leave to further amend the complaint is denied.
The parties' remaining contentions have been considered and are without merit. Accordingly, it is hereby
ORDERED that the Dennis defendants' motion (Seq. #1) is granted to the extent that the fourth, fifth, seventh, eighth, and eleventh causes of action are dismissed; and it is further
ORDERED that the S&A defendants' motion (Seq. #2) is granted to the extent that the sixth, ninth, and tenth causes of action are dismissed, and the first cause of action is dismissed as against defendant Nik Stanovic in his individual capacity; and it is further
ORDERED that the branch of the S&A defendants' motion seeking dismissal of the third cause of action sounding in negligence is granted except as to the claim that the S&A defendants and Nik Stanovic negligently caused a fire in the house resulting in property damage, and it is further
ORDERED that plaintiffs' motion (Seq. #3) seeking leave to amend their amended complaint is denied it its entirety; and it is further
ORDERED that the Dennis defendants shall serve a copy of this Decision and Order with notice of entry upon all parties and file proof of service on NYSCEF within ten (10) days; and it is further
ORDERED that all defendants shall serve an answer to the amended complaint within ten (10) days of service of the order with notice of entry (CPLR § 3211 [f|); and it is further
ORDERED that the parties shall complete and file to NYSCEF a fully executed preliminary conference stipulation and order on or before May 26, 2023 (https://www.nycourts.gov/legacypdfs/courts/9jd/civilCaseMgmt/west-general-civil-preliminary-conf-stip-form.pdf).
The foregoing constitutes the Decision and Order of the Court.